How do you know when you have found an edge

It took me a long time to find my edge cause basically I was lazy in the beginning and the market was more than happy to let me donate my money to others. No single trade has more than a 50/50 chance of being profitable, but when you backtest 3000 plus sample size and you get the results that allows you to know how bad is bad and how good is good, I started to develop my edge.

Of course the next part is even more difficult, controling what my mind is seeing as opposed to the rules that I have made for my methods. I had to learn as well as I am sure all have found out why it takes as long as it does to make a set of rules for trading. The discovery takes years for most to find what doesn't work for them. I think for me, I was trying to "Invent" my methods, but as in all "Inventors", the final product happens by mistake and I found what worked for me.

Now I wish I could say I found my set of rules and I don't have to tweak anything ever again, but the real facts is I work harder now refining my edge than when I was much younger.

I think most traders don't make it because you really have to live and breath it. If you think it can be a part time endeavor, I think it be better to plan a vacation.

Handle
 
Quote from riskfreetrading:

You seem to assume that the + and - days are 50% each. Is that correct?

Add frequencies of events to your analysis, and tell us what you now think.

PS: I think I know what your answer might be. I usually receive a dozen answers to my above comment to your remark. I will know whether your mental view and your answer are among what I have seen so far.
More...

lol i think both of you guys are wackos.

as to this question.. if i understand you correctly i would have to say 'no' i dont assume that the good and bad are 50% each.. how i manage the - so that the + are in my favor is by reducing it to lesser than 50% for myself primarily through risk management. outside of that it is just understanding how to trade.
 
Quote from antincedo:

lol i think both of you guys are wackos.

as to this question.. if i understand you correctly i would have to say 'no' i dont assume that the good and bad are 50% each.. how i manage the - so that the + are in my favor is by reducing it to lesser than 50% for myself primarily through risk management. outside of that it is just understanding how to trade.
More...

Putting insults aside, that is more or less the answer I expected you to give.

By cutting your losses, your wins will be less that 50% (or put the other way your losses higher than 50%), which makes your initial statement about the edge totally FALSE.

I concluded from what you wrote that you do not trade or that if you trade that you will lose potentially everything, and then you will understand or simply leave the market. Your are not alone. 90% of the people are like you.

The market will teach you.

Because of your insults, I will not help you anymore (or sorry to others who might have learned something). Bye.
 
Quote from apak:

at times you sound like jacko the whacko

I don't have a problem with what you say

I have a problem with # of posts you have

I'll PM you some time, we may be equals in awareness :)
More...

attachment.php
 

Attachments

Quote from riskfreetrading:

Putting insults aside, that is more or less the answer I expected you to give.

By cutting your losses, your wins will be less that 50% (or put the other way your losses higher than 50%), which makes your initial statement about the edge totally FALSE.

I concluded from what you wrote that you do not trade or that if you trade that you will lose potentially everything, and then you will understand or simply leave the market. Your are not alone. 90% of the people are like you.

The market will teach you.

Because of your insults, I will not help you anymore (or sorry to others who might have learned something). Bye.
More...

by cutting your losses your wins will be less than 50%...? :confused:

wouldn't this depend on the number of losses ones strategy would endure statistically? you got me a little lost.

it sounds like you're saying cutting losses is a bad thing? what do you suggest doing with losses?
 
i believe what you are actually saying is that by cutting losses ones win ratio would be less than 50% which is fine if you are able to take greater reward to compensate for the losses. although if you master your entries you can maintain 50% or greater which is the difference between profitable and very profitable.
 
what are you guys even talking about....

based on my experiences of my own edges:

avg winner > avg loser
# of winners > # of losers

do that 100+ times a day and you'll result in

95% winning days
avg winning day > avg losing day


that's an edge. well, anything with positive expectancy after commissions/slippage is an edge.
 
Yes, there are many people here who are not consistently profitable. Many of those have developed trading rules, via much hard work and hard knocks, but sometimes lack the self-discipline to stick to them. Been there myself. The human mind is fundamentally unsuited to the markets, and has to be trained to operate in them (see Trading in the Zone by Mark Douglas - this book totally changed the way I view the markets).

If you are wondering whether you lack edge or lack discipline, I would say you do not yet have an edge. If you did, you would know it, as an edge is simply a set of rules (however simple or complex they may be) that tell you when to get in and get out.


Quote from keep learning:

Andrewbee,

Thanks. Let me just confirm... you say that you know you have an edge when you can make money consistently.

What i dont understand is that many (if not most) of the posts here are from traders who are not consistently profitable. (just from reading the comments).

Additionally, it sounds like most of them are not consistent because they don't follow their own rules (lack discipline)- at least from reading what they write.

I'm not consistently profitable either. But often wonder it is because lack of edge or lack of discipline?

Should I just look at my records and do a post mortem on my failed trades? My sense is that I may be in a poor position to judge my own shortcomings.... any thoughts
More...
 
You must log in or register to reply here.
Back
Top